Laiki depositors applaud action on solidarity fund

1 min read

Laiki depositors who lost their fortunes a decade ago after the banking  crisis and meltdown of the Cyprus economy are hoping to get a tenth of their money back some time next year.

The Depositors Association of the former Laiki Bank (SYKALA) voiced its approval of the government making good on a pre-election promise by President Nikos Christodoulides’ to put into motion the Solidarity Fund for depositors affected by the 2013 haircut.

In comments to CyBC state radio, SYKALA president Adonis Papaconstantinou affirmed that an online platform for affected depositors to submit their information is now up and running and that the final deadline is the end of April 2024.

“As per the government’s latest update, the fund holds reserves totalling €230 mln as well as real estate assets valued at €90 mln,” said Papaconstantinou.

Back in March 2013, Laiki and Bank of Cyprus depositors with uninsured deposits over €100,000 suffered heavy losses from a haircut imposed as part of the €10 bln bailout for Cyprus by the Euro area finance ministers (Eurogroup).

A haircut on uninsured depositors was imposed on the Bank of Cyprus, in return for shares, which have since diminished in value, while Laiki Popular Bank was liquidated.

According to IMF estimates, the haircut of uninsured deposits amounted to almost €8 bln, of which €3.7 bln was in Laiki.

First disbursements

From December, a government online platform for those affected by the 2013 decisions (deprived depositors, security holders and shareholders) is operational to apply for support from the Solidarity Fund, with the first disbursements expected in 2024.

Meanwhile, the island’s legal services are busy fending off recent court decisions granting compensation to clients of the former Laiki Bank for the 2013 deposit haircut.

Last week, Attorney General George Savvides appealed a Limassol District Court decision that last month awarded compensation to an individual in a 2013 Laiki Bank haircut case, the first of its kind.

The groundbreaking ruling by the Limassol court granted over €780,000 in compensation to a Russian depositor.

The Attorney General’s office has also announced its intention to challenge a second decision awarding damages totaling €5.4 mln to five Russian and Belarusian depositors of the former Laiki Popular Bank.

In its statements, the AG’s office emphasised that previous lawsuits filed by depositors post-crash have failed, adding that a thorough examination of the Cyprus court’s judgment led them to determine the necessity to file an appeal.

A dedicated team from the Legal Service is already in the process of preparing the appeal, underscoring the Republic’s commitment to contesting this unique legal outcome.

The recent rulings by the Limassol District Court attributed the deposit reductions to negligent acts by the Republic of Cyprus and the Central Bank of Cyprus (CBC).

In both cases, the court criticised the CBC for allowing the banking sector to expand without necessary controls to protect depositors’ interests and for not addressing the lack of liquidity in Laiki Bank since 2010, established by the CBC itself.